Author: Twitter user Mosi

Translation: Tim, PANews

This article represents the author's views and does not constitute investment advice.

In the cryptocurrency space, perception is everything. As Plato's Allegory of the Cave reveals, many investors are like prisoners trapped in the shadows of the cave—misled by the false values distorted by bad actors. This article will deeply expose how VC-backed projects systematically implement the following manipulation tactics to pave the way for controlling their token prices:

• Inflate the "false circulation" of their tokens as much as possible.
• Keep the "real circulation" of the tokens as low as possible (to help them pump the price).
• Use the fact that the real circulation is extremely low to artificially inflate the token price.
• Shift from a trend of low circulation/high FDV to a new trend of false circulation/high FDV.

No, no, no! We are not a low circulation/high FDV token; we are a "community-first" token!

Earlier this year, the popularity of meme-based meme coins surged, overshadowing traditional VC tokens. These tokens, mockingly referred to by the market as "low circulation/high FDV," have become unworthy of investment with the launch of the new derivative exchange Hyperliquid. Unfortunately, some project teams have not acknowledged the fundamental flaws in their token economic models, nor have they focused on developing products with real value; instead, they have intensified efforts to artificially suppress circulation, contrary to their public claims.

Suppressing token circulation benefits these projects because it makes price manipulation extremely easy. Through behind-the-scenes trading:

1) The foundation first sells locked tokens for cash.

2) Then, they buy back on the open market.

3) Capital efficiency is significantly improved.

At the same time, this characteristic of low actual circulation makes the tokens extremely susceptible to wild price swings, posing significant risks to short sellers and leveraged traders.

Let’s look at some ongoing cases, a non-exhaustive list:

1. Mantra Chain

Why does a project with a TVL of only $4 million have an FDV exceeding $10 billion? The answer is very simple: they control the vast majority of OM's circulation. Mantra has stored 792 million OM (90% of the total circulating supply) in a single wallet. This operation lacks technical sophistication; they are even too lazy to distribute the tokens.

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When I asked Mantra co-founder JP Mullin about this, he claimed it was a mirror wallet, which is simply nonsense.

So, how do we know what Mantra's real circulation is?

We can calculate it as follows:

980 million (circulating supply) - 792 million OM (team-controlled circulating share) = 188 million OM

The claim that the circulating supply of OM tokens is 188 million is likely also inaccurate. The project team still holds a large number of OM tokens; they have previously used witch attack tactics to fabricate accounts to cheat their own airdrop, extracting more funds and further controlling the circulation. The team deployed about 100 million OM tokens for airdrop witch attack, so we will exclude this portion from the real circulation. More information can be referenced:

Thus… the actual circulating supply in the market is only 88 million OM! (Assuming the project team does not control more tokens, but this assumption also seems inaccurate). This makes Mantra's actual circulating market value only $526 million. This is a stark contrast to the $6.3 billion circulating market value displayed on CoinMarketCap!

The low token circulation makes it much easier to manipulate the price of OM and liquidate all shorts. Shorting OM should be a frightening endeavor. The project team controls most of the circulation and can pump or dump at will. This is akin to trying to bet against DWF Labs in the junk coin market. I suspect Tritaurian Capital—a company owned by Jim Preissler (the boss of JP Mullin during his time at trade io)—may have lent $1.5 million to SOMA, along with some funds and market makers from the Middle East, which could be behind the current price fluctuations. This complex relationship further compresses the actual circulation, making it more difficult to calculate the real circulation.

This may explain their cautious attitude towards the airdrop plan and the decision to set a lock-up period. If they push forward with the airdrop plan, it will significantly increase the actual circulation of the tokens, likely leading to a price crash.

This is not a complex financial game, but it does resemble a deliberately orchestrated trap aimed at reducing the actual circulation of tokens and inflating the price of OM.

2. Movement

During the user claim process for the airdrop, Movement Labs provided two options: users could claim the airdrop on the ETH mainnet or choose to claim on their yet-to-launch mainnet for a small additional reward. However, a few hours after the claim channel opened, the following occurred:

• A new fee of 0.015 ETH (approximately $56 at the time) was added for claiming on the Ethereum mainnet, which was charged in addition to the Ethereum network gas fees. This led to most users who had used small interactions on the testnet being unable to afford the high fees.
• The allocation on the Ethereum mainnet was reduced by over 80% while keeping the fees unchanged.
• Claims were halted.
• The claiming process was restricted within an extremely tight deadline.

The results are evident: only 58.7 million MOVE were claimed, accounting for 5% of the originally expected 1 billion MOVE airdrop.

Let’s analyze it like we did with Mantra. According to CoinMarketCap, the self-reported circulation of MOVE tokens is 2.45 billion.

However, according to Move's tokenomics chart, after the token claims are completed, the circulating tokens should only be 2 billion (foundation + initial claim portion), leading to the question: where did the 450 million MOVE tokens come from?

2.45 billion MOVE (self-reported circulating supply) - 1 billion MOVE (foundation allocation) - 941 million MOVE (unclaimed supply) = 509 million MOVE or $203 million actual circulating market value.

The actual circulation is only 20% of the reported data, and I find it hard to believe that all 509 million MOVE tokens in circulation are held by users, but for now, let’s assume this data represents the real circulation.

What happened during this time with such low actual circulation?

• Movement paid WLFI to buy their own tokens.
• Movement paid REX-Osprey to submit an ETF application for MOVE tokens.
• Rushi went to the New York Stock Exchange for negotiations.
• Movement engaged in illegal operations through capital and market makers, selling locked tokens to cash out and manipulate market prices.
• The project team deposited 150 million MOVE tokens at the peak price on Bybit. They likely began selling at the peak price, as the token price subsequently fell.

Around the time of the TGE, the team paid $700,000 monthly to a Chinese KOL marketing agency to secure a listing on Binance and find buyers in the Asian market.

As Rushi often says:

3. Kaito

Kaito is the only project on this list that has a real product. However, their current airdrop activity also exhibits similar behavior.

As pointed out above on CBB, Kaito distributed their airdrop, but only a small portion of people claimed it. This also affects the actual circulation; let's calculate it:

According to CoinMarketCap, Kaito's circulating supply is 241 million (corresponding to a market value of $314 million). I suspect this number already includes the following portions: the holdings of Binance exchange holders, liquidity incentive program tokens, tokens allocated by the foundation, as well as initial community shares and claimed tokens.

Let’s analyze step by step to find the true circulation:

Actual circulation = 241 million KAITO - 6.8 million (unclaimed tokens) - 10 million (foundation tokens) = 73 million KAITO

The actual circulating market value is equivalent to $94.9 million, far lower than the data reported by CoinMarketCap (CMC).

Among the projects on this list, only Kaito is worthy of my trust; at least they have a product that can generate revenue, and as far as I know, their team has not engaged in as many disreputable actions as the other two teams.

Solutions and Conclusion

CMC and Coingecko should display the real circulation of tokens, rather than the arbitrary data submitted by the teams.

Exchanges like Binance should actively take measures to punish such behavior. The current listing model has loopholes, allowing project teams to artificially inflate the hype in the Asian market by simply paying KOL marketing agencies before the TGE, just like Movement did.

The prices may have changed since I wrote this article, but for reference, the data I used is: Move at $0.4, KAITO at $1.3, and Mantra at $6.

If you are a trader, be sure to stay away from these tokens, as the project teams can manipulate the prices at will. They control all circulation, thus controlling the liquidity and price of the tokens (this article is not investment advice).

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